Two major trends – the rapid growth of third-party logistics providers (3PLs) and advances in technology solutions – have dominated transportation headlines recently. Technology conversations are revolving around SaaS and Cloud computing, while an increasing number of more traditional, carrier-only shippers are beginning to use 3PLs. It’s become increasingly important to know what these strange spatial references and awkward acronyms mean and how they work together to provide superior transportation management.
Software-as-a-service (SaaS) offers shippers the ability to connect all parties in the supply chain, providing value-added, low-cost, pay-as-you-go, Web-based solutions that communicate in real-time. For these reasons, the supply chain arena was an early adopter of SaaS.
Since implementing SaaS solutions, the industry has enhanced its efficiency due to the inherent qualities of this unique software delivery model. SaaS allows companies to run a single instance of software rather than maintaining software that has to be installed across their organization on various workstation configurations.
SaaS offers many advantages over traditional software, including:
- Operating system platform independence by leveraging programs already installed on virtually all end-user computers (mainly the Web browser).
- Easy deployment of new or updated software packages (reducing the time needed to bring software to market).
- No onsite server hardware required at a client or user location.
Consider an international supply chain that involves freight forwarders, customs and customs brokers, steamship lines, drayage companies, railroads and truckers. To minimize supply chain disruptions, each of these entities needs to communicate in real time. SaaS can ensure compliance to regulatory requirements and provide a single repository for documents and data. This data-centric approach to supply chain management drives innovation and networking through automation and access to information, yielding better decision-making.
SaaS advantages are enhanced when combined with Cloud computing, which offers the ability to rapidly scale as demand for the software increases. While scalability is common, the more complex approach of Cloud computing enables dynamic and immediate adjustments to spikes in usage.
The Cloud architecture recognizes usage increases by a SaaS application and allocates more resources to handle them. Similarly, Cloud computing reacts to usage decreases (e.g., during non-business hours) by releasing resources back to the Cloud and availing them to other SaaS applications.
The powerful combination of SaaS with Cloud computing is especially suited to companies that have close, interactive and dynamic relationships with their clients. This aptly describes the unique relationship between a logistics provider and its shippers, making these technology solutions ideal for the 3PL business model.
Likewise, 3PL providers offer additional strengths to these technology solutions, including logistics expertise and the ability to take good software and deliver great results. Even the best technology cannot replace knowledgeable people who can analyze information, determine a course of action and drive change into an organization. The challenge is finding experienced supply chain experts who can connect all the pieces: software, process changes, metrics, best practices, continuous improvement and cultural nuance – and, more so, create business value.
A third-party logistics provider with a comprehensive software program can leverage not only SaaS solutions and Cloud-based software, but also their human expertise to offer a complete solution for the small to midsize shipper.
About the Author: Jim Monkmeyer is director of England Logistics’ Supply Chain Engineering (SCE) division. More information at www.englandlogistics.com/sce.